Virginia’s economic growth, which has outpaced the national recovery, has been driven in no small part by our more than 640,000 small businesses. With more than 3 million employees throughout the commonwealth working in small businesses, many of them technology-based startups, it is imperative that we maintain the competitive edge that makes Virginia one of the best places for businesses to grow or locate. But a forthcoming tax threatens to put the brakes on this fragile economic recovery we are experiencing.
The Health Insurance Tax (HIT) is one of the largest tax increases included in the Patient Protection and Affordable Care Act (PPACA), signed into law in 2010 and commonly known as Obamacare. The HIT will be levied on health insurance companies that deal in the fully insured marketplace. And because 88 percent of small businesses purchase in that marketplace, the HIT will be directly passed on to the small-business community. That will have a significant adverse effect on these companies, their employees, and their families.
As a member of the House of Delegates, I have been mindful of how the president’s health care law will affect Virginia’s businesses and those wanting to start a business. We have studied the potential effects of the law in the General Assembly and are keenly concerned about the many new tax burdens that are integral to the PPACA.
With so many new regulations and additional burdens being imposed on our businesses because of Obamacare, government is endangering the livelihoods of millions of our residents. Though the hardworking nature of our people will try to mitigate the negative effects of over-regulation and added taxation, I fear we may soon reach a tipping point. Case in point: a study by former Congressional Budget Office Director Doug Holtz-Eakin showed that, on average, the HIT will cost each family about $5,000 in higher premiums over the coming decade.
On Jan. 1, 2014, less than six months from now, Obamacare is scheduled to go fully into effect and businesses can expect the HIT. My constituents who own businesses tell me they are just starting to get a handle on the amount of new taxes they will have to pay and are struggling to budget accordingly. The added expense will likely shift the focus from planning to expand businesses and adding new employees to merely maintaining current payrolls. More disturbingly, the HIT may result in some businesses being forced to lay off workers or even close their doors. This is one burden too many.
While the Obama administration announced last week that it would delay the imposition of the employer mandate, which requires businesses with 50 workers purchase insurance for their employees, until 2015, this does nothing to relieve the burden of increased health care costs on small business beginning in 2014. If the president really wants to protect small businesses, he must eliminate the Health Insurance Tax.
Sens. John Barrasso, of Wyoming, and Orrin Hatch, of Utah, have introduced legislation in the U.S. Senate to repeal the HIT, while Reps. Charles Boustany, of Louisiana, and Jim Matheson, of Utah, have sponsored a version of the legislation in the U.S. House of Representatives. A majority of lawmakers in the House have now pledged support of this bill, an encouraging sign that some of our elected public officials understand how destructive this kind of government encroachment can be.
With six months to go until the implementation of Obamacare, the time for reading the fine print is overdue. There’s still time to stop the implementation of the HIT, and to preserve the progress being made by small businesses during this sometimes plodding and always challenging recovery.
Byron has represented the 22nd District in the Virginia House of Delegates since 1998.She is a member of the Virginia Health Insurance Reform Commission.